Chapter 13 Bankruptcy - Benefits of Filing

Admitting that you can’t pay your bills is hard enough. But if you are bringing home a regular income then it can be almost an unbearable feeling. Choosing to file is not an easy decision by any means. But being able to pay some of the debts that you owe can make you feel a little better. Chapter 13 bankruptcy is a way for you to get out from under some of the bills that you have while still paying at least a portion of what you owe.

Chapter 13 bankruptcy is a portion of the code that allows your debt to be adjusted. That means that you will be able to pay the part of the debt that you owe off while still retaining your property. You will be set up on a plan to repay your creditors for a set number of time. This time is generally either three or five years. The amount that you will have to repay and the length of time that you will have to repay will be dependent upon what your current income level is. There is a means test that the courts will use to determine how much and how long.

There are a lot of advantages to choosing a Chapter 13 bankruptcy. The biggest thing is that you get to keep your property. If you file a Chapter 7 then you will have to liquidate your assets. That means you’ll have to sell your home, or more likely the courts will foreclose on it. Other big assets will also be sold in order to pay your creditors the money that is owed to them. By filing this other way you’ll be able to maintain all of your assets using the money that you currently make to pay back your creditors.

If you have any secured debts then you may be able to restructure them through a Chapter 13 bankruptcy. You’ll still have to repay them but for the set amount of time the repayment process is in effect you might be able to enjoy a little relief. The payments may be lowered or even rescheduled so that you can make the payments easier. For your mortgage of your primary residence this rescheduling is not an option and all mortgage payments must be made on time during the repayment process or you can still face losing your home.

Going with a Chapter 13 bankruptcy is marginally better than other options you have. You get to keep your assets and your secured debt can be rescheduled during the repayment time frame. You will also get some relief from collection calls as your creditors will not be allowed to contact you during the repayment time. You won’t have any contact with your creditors either. The money that you pay will go to a trustee who will disburse the monies to the respective creditors.